Snapchat was hit with a massive wave of criticism following its major redesign in late November when it separated content feeds between friends and publishers. It now appears negative reviews might not be the company’s biggest problem following its shaky first-quarter earnings call on Tuesday.
At the time of the November update, over a million Snapchat users signed an online petition to revert the app back to its original format. The petition claimed that the update made the app more difficult to use and that “many new features are useless or [defeat Snapchat’s] original purpose.” The app’s rating on the Apple App Store has sunk to 1.9 stars out of five, with many negative reviews citing that the new update was “confusing.” And the company may now be feeling the fallout.
Snap Inc.’s Chief Financial Officer, Drew Vollero, announced during Tuesday’s earnings call that the company pulled in a total of $231 million in revenue during the first quarter of 2018, down from $286 million last quarter. While this is still substantial growth for the company if you take into account that it brought in roughly $150 million a year ago, Snap’s stock plummeted more than 15 percent after its Q1 call. This may have resulted from Vollero’s projections for the following quarter, which also looks grim.
“As we think about our year-over-year revenue growth rates, we are planning our [second-quarter] growth rate to decelerate substantially from Q1 levels,” he said.
While the company saw a dip in revenue it reported 191 million daily active users, up from 187 million at the end of last year. This should lead to more revenue, but the departure of some advertisers in the previous quarter made it so the company earned less from each user.
Following November’s controversial redesign, CEO Evan Spiegel announced a reversal of the revamp. Instead of putting users’ Stories in a separate menu they will, once again, be grouped into the “Discover” menu alongside those from publishers. Spiegel explained that he made the move following negative responses to the initial change.
“We learned that combining watching Stories and communicating with friends into the same place made it harder to optimize for both competing behaviors,” he told investors. “We are currently rolling out an update to address this.”
While Spiegel seems to have taken a hint from Snapchat’s user base, the app has a lot of ground to make up. The company says it is banking on this update driving up engagement and attracting more advertisers. Snapchat’s pivot away from its November redesign might have taken some advice from upset users, but it remains to be seen if it can perform as well as the app’s previous iteration.